US Treasury Yields Rise Following Positive Data

US Treasury yields increased after data revealed a boost in consumer spending in the United States during August, according to figures released on Tuesday by the US Bureau of Labour Statistics. The yield on the 10-year US Treasury note rose to 3.644% compared to the previous day’s close of 3.623%. These benchmark yields had earlier hit a low of 3.597% and a high of 3.658% on Tuesday.

US retail sales rose by 0.1% in August compared to the previous month’s revised reading of 1.1%, surpassing market expectations of a 0.2% decline. This data has improved the outlook for consumer spending, which, if sustained, could lead to renewed price pressures and higher inflation, potentially hindering the Federal Reserve’s efforts to cut interest rates. Despite these concerns, it is not expected that this data will significantly influence the Federal Reserve’s decision, which is scheduled to be announced next Wednesday. However, it could impact future decisions.

Financial market traders are eagerly awaiting the Federal Reserve’s interest rate decision next Wednesday, with expectations that the central bank will cut rates by 50 basis points. Such a move would typically weaken the US dollar and its assets, including Treasury bonds, as yields tend to decline when interest rates are lowered. However, Tuesday’s data has mitigated this downward pressure despite the growing expectations of a substantial rate cut.